How a profiteer works one of the world’s worst economies

Dave Mphele, a black marketeer in Zimbabwe, uses a combination of cunning and coercion to thrive in a nation with 231 million percent inflation. In his own bizarre way, he’s helping the country function.

HARARE, ZIMBABWEDave Mphele stands tall and proud in front of his sprawling three-story mansion. He is giving us a tour of his newest real estate acquisition (he already owns seven other houses). This place will be worth US$8 million when completed. He waves his arms excitedly at the roof. “Look at the quality of the tiling,” he says with pride.

Then his phone rings. His friend needs to borrow $100. And, as Mr. Mphele soon makes clear, the friend wants to borrow the money from us. Reporters.

“It’s impossible to get cash around here,” Mphele explains, referring to the rapid dollarization of Zimbabwe’s basket-case economy. The plea for pocket money from two journalists seems perplexing coming from a man who has his own swimming pool and tennis court, plainly visible through the window of his new house.

Like many of the nouveau riche in Zimbabwe, Mphele (whose name, like everyone’s in this piece, has been changed for security reasons) is a man of contradictions. He goes to church every Sunday, but he has a team of eight thugs who enforce his deals.

He delivers firewood to needy homes, and an hour later bribes a local police official. He takes his daughter to France to visit Disneyland, but he admits to having shot a man, though not fatally. He’s a one-man NGO, a mafia king, a doting father, a shrewd businessman, and, potentially, the future president of Zimbabwe (or so he claims).

In reality, Mphele, 33, is a middleman in one of the worst economies in the world. He is part of an underground network of black marketeers, foreign-exchange dealers, import-export merchants, and just plain street-savvy capitalists who dabble in anything that turns a profit. They are opportunists and entrepreneurs who, in their own perverse way, help a destitute country function.

“There are very shady guys, but there are also teachers selling things on the side because they don’t make enough,” says a Western diplomat. “If people are making serious money, they have a protector in ZANU-PF [President Robert Mugabe’s political party].”

It isn’t easy to survive, let alone thrive, amid Zimbabwe’s continuing economic collapse. With a seemingly endless stream of billion-dollar notes printed daily, the country has faced some of the worst hyperinflation in history: The official rate is 231 million percent per year.

Upwards of 80 percent of the people are unemployed, and those who still work are paid largely in Zimbabwean dollars, though the government is now allowing businesses to charge in foreign currencies to help check inflation. Not surprisingly, 7 in 10 people eat only one meal per day, or none at all. Millions are in need of food aid.

Loud, boisterous, and unafraid to get his hands dirty, Mphele is representative of an often overlooked sphere of wheeler-dealers who have prospered as disease and famine ravage the country. These new titans of commerce – hundreds exist in Harare alone – skirt traditional routes to business success.

Ironically, they get richer as the poor become poorer. But they also serve important functions in Zimbabwe’s bizarre economy, in which basic institutions like banks or exchange bureaus have essentially stopped functioning.

Mphele himself owns part of a mine, a wholesale grocery outlet, a beverage distribution center, an electrical company, a sports bar, an investment bank, a security firm, and a house-painting service. Suffice it to say that a week with him can lead to anything.

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The car we approach is a beat-up old Nissan. It’s painted canary-yellow, sounds like a lawn mower, and reeks of gasoline. Parked in front of his McMansion, it looks like either a modern art piece or a bad joke (Mphele insists his new Mercedes CLK 63 is on its way from Germany).

It turns out his ragtag vehicle is necessary to blend in at our next stop, Epworth, a township outside Harare known for crime and poverty. Mphele’s mission: delivering a few dollars to his aunt, who is among a dozen or so relatives who rely on him for food, clothing, and shelter.

Going from his house in the exclusive community of Borrowdale to his aunt’s shack in Epworth is like driving from Beverly Hills to Watts. There’s no running water or electricity, yet Mphele seems at home. He waves to all of his aunt’s neighbors, hugs his nephews, and grills them about schoolwork.

We chat for a few minutes, he hands her some money, and we drive away. Mphele’s demeanor instantly changes. He points at a group of youths and says, “Thugs are bred here in Epworth. There are no other jobs, even for university grads.” Thieves are yet another type of Zimbabwean entrepreneur.

Then we pass a man walking. Mphele tells us the man once worked for him and stole a bike, so he fired him, dumped all his stuff on the street, and hasn’t spoken to him since. “I’m not a bad character, but I can’t appear to be vulnerable,” he says. “You have to get ruthless in Zimbabwe.”

He’s nonchalant about his uglier side, freely talking about the gun he carries, the limbs he’s broken, and the stint he spent in prison for illegally trading in foreign currency. “I have guys who I will call, and they will go to jail for me. I’m the kind of guy who will get my money,” Mphele says. In a hurried voice, he adds, “But I haven’t had anybody killed.”

Even his buddies think he is shady, nicknaming him Dirty Dave. “He knows too many people,” says one friend. “He’s the kind of guy who can get you anything.”The tough act isn’t anything new. “I was short and small in school – constantly bullied – so I had to fight back,” says Mphele. But it was also on the playground where he earned his first buck, selling candy and gum to wealthier classmates, since Mphele grew up poor. Both of his parents had to work, his mother in a supermarket and his father in a shopping mall.

“I brought myself to where I am today,” he says. “I created something out of nothing.”

Even as busy as he is (his mobile phone bill runs $800 per month), Mphele can’t stop working. This month, he’ll be enrolling in a three-year correspondence program in law.

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A couple days later, we’re on our way to Borrowdale Brook, a gated enclave within Borrowdale. Mr. Mugabe has an Oriental-style home here. The foreign press rarely mentions this side of Zimbabwe: suburban lawns, scowling guards, and 18-hole golf courses.

We wonder aloud how we will get in. Mphele then delivers one of his many mantras: “I don’t know why you’re panicking,” he says. “I told you I’ll take care of it.” He does. Soon, we’re gawking at the splendor within the electrified walls. Despite the old Nissan, Mphele fits in here, too, schmoozing with waiters at the members-only clubhouse and buying expensive drinks.

The rest of the week is more tension-filled. We go to a tough township to buy a cellphone card. While there, Mphele sees a top intelligence official and gives him a ride home.

On another afternoon, we pull into a liquor store, and Mphele, of course, knows the owner, Peter Thompson. He is a younger version of Mphele. Until six months ago, he was running a one-man bank out of his garage. He exchanged more than US$1 million per year in foreign currency for multinational corporations like Dell and Coca-Cola.

But over the summer, with Mr. Mugabe’s much-criticized price controls causing a run on consumer goods, Thompson saw an opportunity. He started importing liquor from South Africa and marking it up 1,000 percent. Many of his friends have now started similar ventures. “The government stopped paying people,” he says. “So we have to create our own businesses.”

At 2 a.m., we are still out and puttering along in the Nissan, when, suddenly, it blows a tire. By the time it’s fixed, two hours later, we’re apprehensive about driving the car on the dark Harare roads. Mphele, seeing our faces, leans close, his thick eyebrows wiggling mischievously.